While the national media outlets are reporting housing price corrections, they often miss the underlying story of buy low and sell high.  Too often we find the media creates additional questions that are left un-answered.  The question that is received fairly regularly is:

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Is This A Good Time To Buy?

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The answer is always subject to your time horizon.  Are you buying to live in the home for a medium to long range period (5-7 years) or is this a speculative move over the short run. 

Over the course of history, Real Estate has earned a 3-5% rate of return depending on the area of the country purchased in.  What seems interesting is that when a retail shop puts on a sale, the general media welcomes the paid advertising dollars and the consumers flood to buy goods or services.  When the stock market or real estate market corrects, or PUTS ON A SALE, the national media professes doom and gloom and the consumers walk away disgusted they didn’t “get-in” at the top of the market.

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Buy Low and Sell High

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Prices of real estate will always be tied to supply and demand. There are factors to consider which will create demand are population growth and unemployment. 

 The fact that Arizona is one the fastest growing state in the nation in terms of population growth is the key ingredient to the demand question. As more people move into Arizona from other parts of the country, the demand for housing will continue to grow.  Yuma, Arizona projects a doubling of the city population in the next 25 years.

 Are we going to see double digit growth annually? NO.  Anyone who plans for such returns is planning for failure.  However, if a proper long term outlook is viewed one will realize that the population for the United States doubles every 50 years.  This built-in increase in demand has a tremendous impact on housing prices. 

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Supply and Demand

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In 2006 the United States surpassed 300 Million people.  The median home price in 2006 was just under $200,000.  Now if one looks back 50 years with a population of 150 Million people, the median home price was just $24,000.  Jump back 50 more years and the population base was only 75 Million people with a median home price of $1,400.  What this translates into is that if a real estate purchase is planned now for a medium to long range purchase (3-7 years), now is still a great time to buy and you can even buy while real estate is on sale. 

Derek Egeberg, CMPS
The “Approval Coach”
Territorial Mortgage
928-314-1008 ext 13
928-246-0422
www.TheApprovalCoach.com

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